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Statement on Bankruptcy Law and Judicial Reform.

February 26, 1932

THE PRESIDENT said:

"I shall be sending to the Congress early next week a message on the subject of reform of the bankruptcy laws and procedure of the Federal courts in criminal cases.

"Two years ago I directed that a searching investigation be undertaken in the matter of bankruptcy laws by the Department of Justice and the Department of Commerce; that investigation has been completed. The Departments have had the able cooperation of different private bodies. The investigation disclosed that the number of cases of bankruptcy steadily increased from 23,000 in 1921 to 53,000 in 1928 and to 65,000 in 1931. Losses to creditors have increased from $144 million in 1921 to $740 million in 1928 and to $911 million in 1931. Increases are, therefore, not due to the economic situation but to deeper causes as the largest portion of these increases happened during times of prosperity.

"The present Bankruptcy Act proved, in this investigation, to be defective and to hold out inducements for waste of assets and to permit exploitation and disregard of the rights of creditors and many injustices to bankrupts themselves.

"In the matter of criminal procedure in Federal courts, the investigations by the Department of Justice, the Law Enforcement Commission, and different bar associations agree on recommendations of certain reforms in the matter of permitting accused persons to waive indictment by grand juries if they wish to plead guilty, to overcome technicalities in the constitution of grand juries, to simplify the procedure of the district courts and appeals in criminal cases to the higher courts--the object of all these reforms being to expedite criminal trials and appeals and thus add a deterrent to crime by diminishing technicalities of which convicted persons can take advantage to produce long delays.

"The message will also contain some recommendations as to questions of diversity of citizenship in the Federal courts and some recommendations for relief of congestion in the courts by the addition of certain judges as recommended by the judicial council."

Herbert Hoover, Statement on Bankruptcy Law and Judicial Reform. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/208352

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